{"id":331,"date":"2012-02-10T04:38:15","date_gmt":"2012-02-10T12:38:15","guid":{"rendered":"http:\/\/www.cultofmoney.com\/?p=331"},"modified":"2021-10-27T14:32:43","modified_gmt":"2021-10-27T22:32:43","slug":"refinancing-your-home-mortgage-save-thousands-for-what-you-have-now","status":"publish","type":"post","link":"https:\/\/www.cultofmoney.com\/refinancing-your-home-mortgage-save-thousands-for-what-you-have-now\/","title":{"rendered":"Refinancing Your Home Mortgage Can Save You Thousands [Which You Can Use Today]"},"content":{"rendered":"
\"Refi<\/a>
Refinance, and pay less for this<\/figcaption><\/figure>\n

Appropriately refinancing your home mortgage is likely the pinnacle of the frugal living meme that you can accomplish in your lifetime.\u00a0 Go ahead and compare this to not buying a coffee every morning, or living like a pauper for 30 years.\u00a0 You can save thousands of dollars by refinancing, and still have the exact same house you have now!\u00a0 And most people don\u2019t put in the few hours of effort that it takes, essentially turning down consulting work paying several thousand dollars an hour.<\/p>\n

Free refinancing is always better<\/strong><\/h3>\n

I have refinanced my mortgage four times over the course of owning a home for 5 years now.\u00a0 I lowered my rate from 6.25% when I first purchased, to 5.5%, to 4.5%, to 3.875%.\u00a0 Only once did I pay for doing so, yet my mortgage payment dropped hundreds of dollars a month.\u00a0 It almost always pays to take a slightly higher interest rate on your loan in exchange for a zero closing cost loan.\u00a0 By higher rates, I mean a 1\/8th<\/sup>of a point of<\/p>\n

\"Savings<\/a>
Amazing savings for something you already own<\/figcaption><\/figure>\n

interest (.125%) and by zero closing cost loans I mean that in exchange for that higher loan rate, that the closing costs are paid by your lender or broker, and not rolled into the loan amount.\u00a0 Now some people will say that you should always get the lowest rate, or you should base it on how long it takes to break even as to whether or not to refinance.<\/p>\n

The reason I say you should always take the free refinancing is because most other people are comparing the two options of refinance if the breakeven is some number of months, or don\u2019t refinance.\u00a0 However, they forget to compare the options of differing rates, namely the lowest possible rate at a refinancing cost of usually around $3,000, or a free option at a slightly higher rate.\u00a0 The reason is that a 1\/8th<\/sup> of a point on a $300,000 loan is worth about $24 per month (or about $8 per $100,000 per month) over the course of a 30 year loan.\u00a0 In order to breakeven on $3,000 of closing costs would take about 10 years.\u00a0 That\u2019s longer than most people live in their house!\u00a0 Even a 1\/4th<\/sup> point would take 5 years to break even, and that\u2019s not considering the time value of money.<\/p>\n

How to negotiate a better mortgage rate<\/strong><\/h3>\n

Depending on the general trend of interest rates, there are a couple of different strategies.\u00a0 In a rising rate market, you generally want to lock in as soon as you can, because if you wait then rates will tend to be higher.\u00a0 In a downtrend of rates, you generally want to wait to lock, as you can get a better rate by waiting a few weeks or months.\u00a0 Now when I say generally trending interest rates, I mean take a look at the yield on the 10-year and pull up a one or two year chart.\u00a0 What is the general direction?\u00a0 That is what I mean by rate trend.\u00a0 Any more specific, and if you can predict interest rates accurately, there are plenty of hedge funds that will pay you a bucket of money.<\/p>\n

I like to ask my current lender what they can do for me and help me get a lower rate.\u00a0 This is the easiest type of refinancing, because the lender already has all your information, and they are already receiving payments from you, so they may be willing to forego an inspection, income verification, and a host of other information.\u00a0 I had good luck with my Wells Fargo mortgage, and I have heard that many credit unions are also good at doing this.<\/p>\n

I also like to have multiple refinancing options going at the same time.\u00a0 This is an advantage during periods of decreasing rates.\u00a0 When you call up a mortgage broker and they ask you to lock your rate, that\u2019s it, your rate is set.\u00a0 To reset your locked rate, you usually need to start the process over again with a different lender, or wait 6 months.\u00a0 If you have a mortgage broker, they work with several lenders and will get you the best rate at the current time.\u00a0 But by the time closing rolls around, if rates are a quarter-point or more (.25%) less than your lock, start the process over, or ask for the lender to bump down, though they usually won\u2019t.\u00a0 If you have multiple lenders in the works, then you can just let one lock expire and move to the next lender in your list.<\/p>\n

\"government<\/a>
Government to the rescue, use the HARP 2.0<\/figcaption><\/figure>\n

Finally, make sure that you have all your information available and correct, especially if you don\u2019t have the best credit.\u00a0 If you don\u2019t also have the required 20% equity, there are a lot of lenders who work with the government HARP (Home Affordable Refinancing Program) and HARP 2.0.\u00a0 Both these programs help people with lower amounts of equity or less stellar credit.\u00a0 Most mortgage brokers will know lenders that deal with these programs and will seek quotes from them when they submit your information.<\/p>\n

Mortgage refinancing summary:<\/strong><\/h3>\n
    \n
  1. Free is always better<\/li>\n
  2. Ask your current lender to help you lower you rate<\/li>\n
  3. Work multiple lenders simultaneously<\/li>\n
  4. Use government programs, you\u2019re paying for them already, so you may as well get a benefit<\/li>\n<\/ol>\n","protected":false},"excerpt":{"rendered":"

    Appropriately refinancing your home mortgage is likely the pinnacle of the frugal living meme that you can accomplish in your lifetime, and can save you money, thousands in fact.<\/p>\n","protected":false},"author":1,"featured_media":340,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"om_disable_all_campaigns":false,"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","footnotes":""},"categories":[686],"tags":[],"acf":[],"_links":{"self":[{"href":"https:\/\/www.cultofmoney.com\/wp-json\/wp\/v2\/posts\/331"}],"collection":[{"href":"https:\/\/www.cultofmoney.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.cultofmoney.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.cultofmoney.com\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.cultofmoney.com\/wp-json\/wp\/v2\/comments?post=331"}],"version-history":[{"count":5,"href":"https:\/\/www.cultofmoney.com\/wp-json\/wp\/v2\/posts\/331\/revisions"}],"predecessor-version":[{"id":3715,"href":"https:\/\/www.cultofmoney.com\/wp-json\/wp\/v2\/posts\/331\/revisions\/3715"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.cultofmoney.com\/wp-json\/wp\/v2\/media\/340"}],"wp:attachment":[{"href":"https:\/\/www.cultofmoney.com\/wp-json\/wp\/v2\/media?parent=331"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.cultofmoney.com\/wp-json\/wp\/v2\/categories?post=331"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.cultofmoney.com\/wp-json\/wp\/v2\/tags?post=331"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}